OBJECTIVES AND BACKGROUND OF THE STUDY

According to the "White Paper on New Developments for fiscal 1995," the number of new businesses in Japan peaked during the period from June 1978 to June 1981 at 358,530 per year (average). Then, began a downward spiral. From July 1989 to June 1991, the number fell 24.3% to an annual level of 271,318.

Several factors made new business startups more difficult after 1985, as compared with the 1970s, include (1) increased startup capital required due to rising real estate prices; (2) the knowledge and skills necessary to set up businesses are more complex and sophisticated; and (3) the difficulty in hiring competent people due to shortage of labor.

The average age of entrepreneurs establishing businesses was 40.0 in 1994 - older than in the past. The aging factor is mostly demographic, i.e., the baby boomers reaching their late 40s.

If the core start-up age is determined to be 20 to 49, there were 53 million such people in 1994. However, Population Trends in Japan and the World (1995) predicted that the number would drop to 52 million by the year 2000, and decline further to 42 million by 2025. This reduction in the core group is expected to decrease the number of business startups. A decrease in business startups will result in the Japanese economy losing much of its vitality.

To counter these circumstances, there are two solutions. First, young people should be encouraged to develop a clear mental image of an entrepreneur. Second, a variety of assistance measures to support young people and facilitate their entrepreneurship should be developed.

At present, only the second remedy, that of assistance measures, is being stressed. Often overlook is the importance of knowing and understanding the question, "What is an entrepreneur?" As children, everybody dreams of becoming a baseball or soccer player, or perhaps, a doctor. Later, when equipped with the skills and passion necessary to fulfill those dreams, we replace these dreams with more concrete mental images. The mental image of an entrepreneur is a combination of a dream and the skills and passion necessary to turn that dream into a reality. Such a mental image is a critical element in the foundation of an entrepreneur.

Objectives

The primary objective of this study is to clarify how this image of an entrepreneur is formed. From published studies and experiences recounted by entrepreneurs themselves, it would appear that the formation of the image of an entrepreneur incorporates three factors related to the individual person: (1) upbringing, (2) childhood experience, and (3) work experience. Numerous prior studies have been made on the role that upbringing and work experience have on forming an image of an entrepreneur. However, very few systematic investigations have been made on the role of childhood experience. Most evidence is in the form of anecdotal accounts. Therefore, the secondary objective of this study is to point out and verify the importance of childhood experience in forming the image of an entrepreneur.

A 1994 study conducted by the Kauffman Foundation of the U.S. found that up to 25 percent of kindergarten students display the skills, talent, and enthusiasm for entrepreneurship, but only three percent of high school graduates display these characteristics. This indicates the importance of childhood experiences, especially during one's elementary and secondary school years, in forming the image of an entrepreneur. Therefore, in investigating one's childhood experiences, this study focuses on the elementary and secondary school years.

PRIOR STUDIES AND ANECDOTES OF INDIVIDUAL EXPERIENCES

After 1990, few studies have been made on topics related to upbringing including personal characteristics and psychological characteristics. However, numerous studies have examined environmental factors which prompt a person to become an entrepreneur, such as work experience and job dissatisfaction. According to Brockhaus and Horwits (1985), researchers have studied personal characteristics and psychological characteristics in an attempt to distinguish entrepreneurs from managers, but no significant differences have been identified. The reason, they concluded, is that large differences exist among entrepreneurs themselves, depending upon the business genre and level of success.

Role of Upbringing

Personal characteristics Most studies on personal characteristics target factors as age, education level and place of residence. Petrof (1980) studies the correlation between oldest child and entrepreneurship, while Dunkelberg and Cooper (1982) studies the correlation between education level and entrepreneur types.

Psychological characteristics Schumpeter (1943) defined CREATIVITY as a tendency to make changes that break the routine cycle. McCelland and many researchers studied NEED FOR ACHIEVEMENT as an entrepreneur characteristic. Jacobowitz and Vilder (1982), on the other hand, referred to INDEPENDENCE as a special quality of an entrepreneur.

Sexton and Bowman (1983) reported that no differences were found between entrepreneurs and corporate employees in terms of RISK-TAKING. Other characteristic attributed to an entrepreneur is Rotter’s INTERNAL LOCUS OF CONTROL theory; the more an individual believes himself to be in control of his life, the more inclined he will be to become an entrepreneur.

Women entrepreneurs and minorities Decarlo and Lyons (1979) made a comparative study on minority and non-minority entrepreneurs. They concluded that, like men, women's dissatisfaction in their current jobs and desire for success were major factors prompting them to become entrepreneurs. However, Brockhous and Horwitz (1985) suggested that because of discrimination women and minorities require higher levels of education and greater family assistance.

Childhood Experiences

Family role models In their studies, Gasse (1985) as well as Watkins and Watkins (1983) stated that in large numbers of entrepreneurs the image of an entrepreneur is based on the family. This is particularly true in instance when the father is either self-employed or an entrepreneur. However, according to a survey by Brockhous and Nord (1979), no difference was found between managers and entrepreneurs when family, relatives and/or friends operate businesses.

Pseudo-entrepreneurial experiences Kourilsky (1980) released a finding that showed that experiential education has a positive impact on identifying entrepreneurial attributes. Through "Mini-Society" targeting subjects at an early age, the children make various products and services, print their own money, develop their own flag. She found that it was possible to identify young people who have the potential to be successful entrepreneurs and provide them with appropriate knowledge. Currently working at the Kauffman Foundation, Dr. Kourilsky is engaged in developing and implementing a childhood-experience program.

Many entrepreneurs have had pseudo-entrepreneurial experiences. Most U.S. children earn their allowances and charity donations by working. Selling home-made cookies, walking the dog, baby-sitting, and setting-up lemonade stands are businesses children enjoy doing. Japanese entrepreneurs have had similar experiences. Shoji Kanazawa, who is a founder of Maruko, a condominium developer, used to deliver newspaper as a child to help support his family. He recalls that he realized he could make more money by soliciting subscribers rather than delivering papers. He adds that this childhood experience was the first step in becoming a successful entrepreneur.

Personal extraordinary experiences Long-term overseas experience, family tragedies such as a parent's death or divorce, serious illness or injury, and the experience of being awarded a prize are considered to be personal extraordinary experiences.

No systematic studies have been made thus far. However, some entrepreneurs cited their father's death as an example of their personal extraordinary experience.

Work Experiences

Industrial expertise It is dangerous to startup business without specialized knowledge of the industry. According to Doutriaux and Sumyar's study (1987), sales growth is strongly related to the entrepreneur's technical expertise over the first four years of business and to one's marketing expertise in the first three years of business.

Ray and Trupin (1987) released a study showing that 83% of Japanese high-tech companies were founded by entrepreneurs who have prior experience in the industry.

Management expertise Ronstadt (1984) stated that management expertise is the least important of all work experiences explaining that most new ventures stay small and require more self-management than organizational management. On the other hand, Bird (1993) stated that it might be that organizations stay small because they lack management systems.

Entrepreneurial experience Bird (1993) introduced a study by Cooper et al. who found that entrepreneurial experiences, especially founding businesses, were a significant factor when predicting the potential success of "second time entrepreneurs." According to this study, entrepreneurs who learn from painful or pleasurable experiences, often have considerable motivation to venture again¾ a taste of independence, control, creativity and leadership can become addicting and few alternative jobs can provide the same stimulation. A study of indirect entrepreneurial experiences was made by Russell (1984). The impact of role models, including friends and former employees who became entrepreneurs, was examined.

As for prior research on the significance of entrepreneur education programs in universities, graduate schools, adult education, Hills (1988) stated that entrepreneurship can definitely be taught. The important differences exist in how entrepreneurship education is delivered.

Three Childhood Experiences

By looking at the research to date and by gathering anecdotal accounts of individual experiences, we can see that the image of an entrepreneur is formed, not through a single experience or personal characteristic, but, more often, through an accumulation of different factors.

Rarely has childhood experience been the subject of research, except for entrepreneurs' personal stories. Therefore, the next objective of this study is to examine the following factors with respect to childhood experiences:

  1. Roles played by parents
  2. Significance of pseudo-entrepreneurial experiences
  3. Impact of extraordinary personal experiences

We conducted a survey by written questionnaire. Based on this data we verified that childhood experiences are vital to the formation of one's image of an entrepreneur.

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Last Updated 3/10/97 by Cheryl Ann Lopez

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